In the rush to make a public net zero commitment some companies are failing to question the intrinsic sustainability of their business models, argues Nick Hughes.
Has your business set a net zero target for carbon emissions? If the answer is no then there’s every chance you’ll soon be in the minority.
When the government set a legally binding target back in June 2019 committing the UK to achieve net zero emissions by 2050 it triggered a domino effect as, one after another, companies set out their ambitions to align with, or in many cases improve on, the government’s own target.
Eighteen months later we are approaching the point in certain sectors, such as technology and food and drink production, where large businesses that do not have a net zero commitment are becoming outliers. In other sectors, including foodservice and hospitality, companies have been more circumspect (often for good reason: for instance where businesses operate largely on client sites where calculating who is responsible for which emissions is complicated). However pressure from campaigners and investors to fall in line is building and will only increase.
As public scrutiny grows so too will the sense of urgency among business leaders over the need to join the net zero club. You could say it’s a virtuous circle. But is it?
A net zero commitment certainly has the potential to be a catalyst for transformational change in areas such as energy, waste, sourcing and packaging. But in the rush to declare a net zero ambition are some companies putting reputation ahead of rigour; PR ahead of the planet; and status in front of science? Could the declaration of a net zero target actually create a barrier to the structural changes companies need to make in order to become an integral part of a sustainable future economy? In certain cases, could it even be construed as greenwashing?
Defining net zero
The term net zero has become synonymous with business engagement in the task of tackling the climate crisis. It follows the 2018 special report on 1.5°C from the Intergovernmental Panel on Climate Change (IPCC) which warned that global emissions must drop to net zero by 2050 for the best chance of avoiding the most catastrophic impacts of climate change.
It’s a seductive term: easily identifiable as being a good thing for the planet while sufficiently vague to cover a broad spectrum of actual ambitions.
And herein lies its key weakness: net zero commitments are not created equally. Some focus narrowly on operational emissions when the majority of a company’s footprint – especially those involved in the production or sale of food – is almost always embedded in their value chain (so-called scope 3 emissions). Others pick off the low-hanging fruit, such as switching to renewable sources of energy, and then pay third parties to do the heavy lifting by purchasing carbon offsets. The quality of some of these is debatable. What’s more, they do not guarantee real emissions’ cuts.
The result is often corporate obfuscation, public confusion and frustration from those businesses that are genuinely doing the right thing by driving down their own emissions and working with their supply chain partners to do the same.
It’s possible to argue that a net zero by 2050 commitment that does not allow any offsetting is stronger and more sustainable than a 2030 pledge that is heavily reliant on it. But that’s not what the public sees nor – with some honourable exceptions – what the media reports. Unless each corporate pledge is rigorously interrogated by journalists and campaigners, the risk is the race to net zero becomes focused on the target – specifically the date – rather than the desired outcome which is a business operating sustainably within planetary limits. As a consequence, polluting and other damaging practices that need to be eliminated risk slipping through the net.
This, of course, relies on publication of the detailed calculations and assumptions that sit behind net zero commitments – a level of transparency that is far from a given in any sector.
So what does ‘good’ look like when it comes to net zero?
First and foremost, a net zero commitment needs to be rooted in science. The Science Based Target Initiative (SBTi) is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and WWF. It says that for a corporate net zero target to be science-based, two conditions must be met: the target “must lead to a depth of decarbonisation consistent with the profound cut in emissions needed in the global economy to limit warming to 1.5°C” and it “must neutralise the impact of any sources of residual emissions that cannot be eliminated by permanently removing an equivalent amount of atmospheric carbon dioxide”.
Although offsetting can form a legitimate part of a company’s strategy, the SBTi says it “does not eliminate the need to reduce emissions in line with science” which “must remain the overarching priority for companies and the central focus of any credible net zero strategy”. In short, companies need to reduce the emissions they can affect, both directly and by working with partners along their value chain, before they resort to offsets.
Some companies are doing just that. Nestlé’s corporate net zero by 2050 commitment and accompanying roadmap does not allow any offsetting at all. But for other businesses, offsets are the foundation on which their net zero commitments are built. Can these companies really say they have done everything in their power to explore all other forms of emissions reduction first?
Some of the more egregious examples are to be found in industries such as oil and aviation where companies have bought up huge quantities of offsets without fundamentally changing business models that depend on burning fossil fuels.
The idea that people can continue with high-emitting activities like flying or driving because the impact is being offset (Shell’s controversial ‘drive carbon neutral’ campaign is a case in point) concerns campaigners. Not least because it’s difficult to know with any certainty that offsets are delivering what they promise.
The global carbon offset market remains voluntary and while there’s no doubt there are suppliers operating with the utmost integrity there is a prevailing view among experts that a lot of offsetting doesn’t do what it says on the tin. A team of academics who last year set out the Oxford principles for net zero aligned carbon offsetting, concluded that “current approaches to offsetting are unlikely to deliver the types of offsets needed to achieve global climate goals”. They went further in suggesting that “offsetting, if not done well, can result in greenwashing and create negative unintended impacts for people and the environment”.
A lot of offsets are currently traded in return for investments in projects that prevent deforestation, generate renewable energy or provide clean cookstoves to communities in the developing world. But these projects do not remove carbon dioxide from the atmosphere, which is considered best practice, they simply avoid emissions that would otherwise have been generated. There is also scepticism over the ‘additionality’ of such projects; in other words would they still have happened had it not been for the purchasing of the offset?
A recent trend is to invest in tree planting as a form of offsetting. This does constitute a carbon removal but with the caveat that those removals take many years to accrue and could be reversed at any time if the woodland is later destroyed or degraded. This poses questions over future accountability for net zero commitments made in the present day by executives who will long since be retired when the results are finally logged.
The gold standard for carbon offsets is permanent carbon removal and storage, for example underground, so that there is no risk of future reversal, however technologies to capture carbon and store it safely are at a nascent stage of development. This is reflected in the price of these offsets, which can be up to a hundred times more expensive than those at the lower end of the quality spectrum.
The right ambition?
All of this poses a conundrum for businesses operating in the food sector, which is not only a high-emitting sector but one in which emissions are especially difficult to abate. Is net zero even a target that all food businesses should aspire to given that we all need to eat and the act of food production will always create biological emissions in the form of carbon dioxide, methane and nitrous oxides? That’s not to suggest food businesses should get a free pass, just that efforts might be better targeted at reducing emissions as far as possible, while accepting that net zero – without significant use of offsetting – is an unrealistic goal. When I asked a veteran environmental campaigner recently whether food businesses should be aiming for net zero if it relies on offsets he responded, frankly: “No, I don’t think they should actually.”
It would take a brave business to stand its ground over net zero given the pressure to be seen to act. Even Nestlé, which doesn’t allow offsets for its corporate 2050 target, is allowing brands such as Nespresso and Nestlé Waters to use offsets in the short term to achieve net zero emissions and thereby compete with rivals in offering consumers “climate-smart” choices.
The next step
None of this is to deny the value in businesses talking the language of net zero. If nothing else it has pushed the issue of climate change into the boardroom and forced polluting industries and businesses to acknowledge their impact on the planet. Going forward, all of us can and should hold companies to account for delivering their commitments to net zero as well as pushing for greater transparency and ambition.
But I find myself returning to the book Doughnut Economics by the economist Kate Raworth in which she argues that every person should exist within a safe space below an ecological ceiling of planetary pressures and above a social foundation for wellbeing. Raworth argues that businesses should not just aim to do no harm (albeit “mission zero” as she calls it is “a truly impressive departure from business as usual”) but should aspire to be actively “regenerative by design” whereby they contribute more to a thriving world than they take out.
Perhaps corporate net zero commitments are the next step on the path towards Raworth’s vision. Certainly they can’t be seen as a destination. Nor can businesses afford to get hung up on the single issue of climate change and ignore the other social and ecological crises that confront us.
Net zero needs to stand for something more than just good intentions. Ultimately, it needs to be the catalyst for a transformation in the way all of us lead our lives.